Why We Need MORE Legal Immigration
Why immigration is SO IMPORTANT.
There is a vigorous, ongoing debate about immigration in this country. Most, if not all of us agree that illegal immigration needs to be controlled and/or curtailed. So let’s stipulate that from the beginning. The discussion that follows will argue that this country will fail economically if we do not increase the levels of (legal) immigration over the next 20 - 25 years.
The size of our labor force is drastically declining [1]. The nation is recovering from a pandemic-induced recession and finding workers to fill job openings has been a challenge for many regions and industries. While many researchers have pointed to the sharp decline in labor force participation rates as an explanation, the role of population growth over time has received less attention - and may be substantially more important. The combination of slower population growth and an aging population are limiting labor force growth and will continue to do so for many years into the future. [2] [3]
“Compared with participation rates, population growth has contributed more consistently to overall labor force growth from year to year. However, the size of this contribution has declined considerably since the youngest baby boomers reached working age. This declining contribution is due primarily to a trend toward lower birth rates. In the early 1950s, there were about 24 births per 1,000 people in the United States. By 2019, the birth rate had fallen by more than half to 11.4 births per 1,000 people. Looking ahead, trends in birth rates will play a large role in the size of the labor force, but migration is also a contributing factor to both population growth and the labor force. At the national level, international migration has contributed positively to population growth over time, though the pace of migration has slowed in recent years.” [3]
For many decades, rapid population growth naturally resulted in a parallel growth in the number of workers — and that growth in the number of workers, in turn, contributed to strong GDP growth. It’s now apparent that this demographic transition is ending; younger people are having fewer children and the boomer generation is largely in retirement. As a result, the population is expected to grow much more slowly and after many decades of a population growth-driven economy, the size of the US labor force is declining. Aging is becoming pronounced and GDP and income per effective consumer will grow much more slowly as a result of these demographic changes. [4]
We need not look any further than Social Security to obtain an immediate vantage point on this issue. There simply are not enough workers, compared to Social Security beneficiaries, to sustain benefits at the level that current formulas provide. More Americans are living longer and continuing to receive benefits, while a declining birth rate has resulted in a smaller workforce to support them.
In 1950, there were 16.5 workers for every retiree receiving benefits. By 2018, that ratio had fallen to 2.8, and in 2020, it was about 2.75. It is expected to further degrade to 2.3 by 2035.
The solvency ratio for Social Security is 2.6 contributing taxpayers for every retiree receiving Social Security benefits. Below this number, Social Security begins to become insolvent, short of significant increases in the payroll tax levy (FICA) or some other mechanism to shore up the program.
The clear takeaway is that, without the addition of outside labor, we will not be able to support Social Security, much less future GDP growth. By 2040, left untouched, the labor force will have only 2.1 workers for every worker on Social Security — far below the Social Security solvency ratio!
The economic effects of immigration are clear: there is little economic support for the view that inflows of foreign labor have reduced jobs or Americans’ wages. Economic theory predictions and the bulk of academic research has confirmed that wages are largely unaffected by immigration over the long-term and that the economic effects of immigration are mostly positive for American citizens and for the overall economy. [5]
The declining size of our workforce will cause significant economic issues and, unless we dramatically INCREASE immigration, our GDP will fall, our economy will begin to falter and we will begin to loose our stake as a global economic power in the world economy — and that will, in turn, make us a potential military target. So next time someone brings up the topic of immigration? -- think about it, long and hard — because your children, and their children will suffer greatly if we cannot find enough qualified labor to support our economy.
As baby boomers have begun moving into retirement in advanced economies around the world, immigration is helping to keep our labor force comparatively young and it is also reducing the burden of financing retirement benefits for a growing elderly population. While American citizens will bear some upfront costs for the provision of public services to immigrants and their families, there is ample evidence that suggests a net positive return on the investment in the long run.
[2] https://thelink.ascensus.com/articles/2020/8/19/social-security-solvency-by-the-numbers
[4] https://onlinelibrary.wiley.com/doi/10.1111/padr.12469